What is Cost Inflation Index?
It is an index used to calculate the notional increase in the value of an asset due to inflation(inflation-adjusted cost price of an asset). The inflation-adjusted price then is used to arrive at long-term capital gains or long-term losses. The CII number is used to calculate the inflation-adjusted price of assets such as land, building, house, gold jewelry, debt mutual funds, etc. However, it cannot be used for equity shares and equity mutual funds whose gains are taxable at the rate of 10 percent without any indexation benefit.
At the time of income tax returns filing next year, this CII number will be helpful to you to ascertain the long-term capital gains on which you are liable to pay taxes.
Cost of Inflation Index FY 2021-22 AY 2022-23 for Capital Gain
Below is the complete list of Cost of Inflation Index FY 2021-22 AY 2022-23 for Capital Gain from the new base year FY 2001-02 to FY 2021-22.
This notification will come into force with effect from the 1st day of April 2021 and will accordingly apply to the Assessment Year 2021-22 and subsequent years.
Let us see how year on year it is increasing from FY 2001-02 to FY 2021-22
You noticed that the CII increased to around 5.31% from the last year.
Hope this information will help you in arriving at your capital gain tax.